CBA and ASIC get defensive

Both the Commonwealth Bank and ASIC were quick to jump the gun and issue statements defending their positions ahead of the airing of ABC’s Four Corners program last night.

The Four Corner’s investigation, Banking Bad, gave the victims caught up in the Commonwealth Financial Planning (CFPL) scandal a voice.

The monumental CFPL case has since resulted in the banning of eight financial advisers and a pay-out of $51 million to over 1,100 affected customers.

The Four Corners investigation particularly focused on the commission culture within the banking industry and how that directly contributed to the CBA saga.

“The program comes at a time when Australia's biggest banks are trying to expand a system that rewards bank tellers and financial planners for selling their products to customers,” the program blurb says.

The family of Noel Stevens were a few of the many victims that featured.

They told the sad story of a man dying of pancreatic cancer taking on the big bank in a David and Goliath-type battle in the last six months of his life.

Previous to his dealings with CBA, Stevens had a watertight life insurance policy with Westpac Bank.

However he was cold-called and encouraged by a teller at CBA to come in and have a chat with one of their planners.

In the meeting, he was convinced to change his life insurance policy over to CBA.

The adviser and the teller got the commission, leaving Stevens to the wolves.

Tragically, just a short time after the policy swap, Stevens was given the terminal cancer diagnosis. He tried to claim on his new life insurance policy but was rebuffed – CBA found that he’d answered several questions about his health incorrectly.

Stevens spent the last months of his life fighting the bank for his life policy money, and it was only a few days before his death - when he was in an inconcious state - that he prevailed.

Prior to the airing of Banking Bad, the CBA released a statement that directly addressed Steven’s plight.

“We acknowledge that the most appropriate action in this case would have been for the customer to have remained with their existing policy. If the Commonwealth Bank had been aware of all relevant circumstances, there would have been no reason for the customer to terminate his existing policy,” it said.

The statement went on to more generally address the scandal, and said the bank has significantly transformed the business in terms of the management team and structure, the culture, the processes and the systems; as a result of these events.

“We deeply regret the events that occurred in our financial planning business where the behaviour of a number of advisers was unacceptable,” it said. “We have apologised to our customers for these events and we have worked with customers to put things right. Customers who experienced losses as a result have been remediated. We continue to work with the small number of customers whose cases remain unresolved.”

And ASIC, who has been heavily criticised due to its treatment of the whistle-blowers that exposed the shocking behaviour within the CFPL, and the 16-months it took them to launch an investigation, also pre-empted the airing of the program by releasing a video statement on YouTube.

Chairman Peter Kell speaks directly-to-camera and blasts CFPL for the “simply unacceptable” behaviour six years ago.

“Commonwealth Financial planners were giving very poor advice to clients, driven by conflicted commission payments. This was part of a wider problem of unacceptable standards and conflicts of interest right across the financial planning industry that ASIC had publicly identified,” he said. “And ASIC understands the severity of this situation and that is exactly why we took enforcement action. We banned eight advisers from the industry. We secured $52 million compensation to more than 1100 clients.”

Kell concedes that ASIC should have acted faster, been more transparent, and communicated better with whistle-blowers, but said the watchdog has since improved its processes in these areas, especially around whistle-blowers.

“More broadly, ASIC has been working to raise standards in the financial advice industry,” he said.

@Probably, I don't disagree with you that being independent is nothing if you're garbage at your job.

My view is this. @BenCFP's advice and service is of more value, will give his clients greater confidence, clarity and peace of mind if he's in an independent environment as opposed to aligned/employed by the bank.

I never want to be seen to be saying independent financial advisers are better than bank advisers, because it can never be true.

However I strongly believe that every financial adviser will perform better in an independent environment as opposed to a bank environment - except for those that push product; they will thrive because the system rewards those that do what the bank's want them too. That is why the system is flawed. Those that are rewarded most are those that are pushing the most bank product.

BenCFP, I'm sure you're a great adviser; my belief is you'll be super great in a different environment. You'll be rewarded more. You'll enjoy it more. Your clients will value you more. They will refer more. You will get greater recognition and respect from peers, family, clients, colleagues, mentors and the community.

Emanuela Turcoon
11/05/2014 9:14:34 AM

My comment is simple, when the bank has introduced a financial planner to convince me the money does not make much profit on deposits, so I should invest the money with different scheme I never ask them for any advice, my instinct always told me better less but save, in rolling over deposits at least the capital will be secure, I never except anything that sounds too good to be true. The victims I saw on four corners all look and sound very intelligent people, if I understand this things without even high school why not them?

Markon
9/05/2014 12:52:41 PM

Its all healthy discussion demonstrating genuine passion for our industry & what we all individually do, but I've pretty well made my point. Would like to make some responses - Firstly "Steve" & "Only the FP Industry", go away, trollers aren't welcomed here. Do something useful with your time. Secondly "Ben CFP" please read my posts carefully i said "am shocked if Ben isn't a Certified Financial Planner", kindly note the word "IF" before posting a rant against constructive comment. Thirdly I obtained my CFP from through grandfathering provisions & my initial studies were through Deakin, as did many of my long serving FP mates. Let me tell you those mates (about 5 I'm thinking of) all made or are still very good Fin Planners. They have been asked to play a mentor role to those newer advisers educated with degrees but whom clearly aren't at their standard. many things make a good FP, Experience, education, people skills, sound personal values etc...Experience deserves to be at the top of that list (like many professions/trades). I did decide to further my studies (UWS - Masters FP), but am quick to point out that its my experience that contributes the most when it comes to my work life. Fourthly, addressed to "Probably" mate we need to fix the structural integrity of our industry before focusing on other important issues such as ensuring advisers aren't idiots. Obviously we cant have idiot advisers running around as IFA's, but my points are about industry structure, its a macro issue called CONFLICT. James thanks for listening, there is hope...

Ben CFPon
9/05/2014 10:43:15 AM

So "Only the FP Industry" what do you do? Not much by the sounds of it! Your comments are nothing but a joke, as are you! Go troll somewhere else.

Steveon
9/05/2014 10:29:32 AM

OMG! Ive never heard such BullS#** from an industry as some of the responses on here. I know your whole livelyhood is at stake so i can understand your complete denial of what really goe on but ANYONE who thinks Financial planners are not salespeople flogging their own self interest are delusional. Seriously, you wouldnt trust 90% of FP's to service your own family would you!

James Howarthon
9/05/2014 9:38:29 AM

Product providers, will always be conflicted when they have their own sales force.

Separating product providers from advice providers is clearly the future of financial advice.

If separated price competition would increase, and moral hazard would be reduced, and that is not arguable.

in medicine the doctors do not work direct for the pharmaceutical companies. That would be a recipe for moral hazard.

ASIC need to spearte advice providers and product providers.

Licencing requirements for Advice - should be comparable to the current limited advice requirements, ie no audit, no financial requirements, and a lot less costly to obtain.

Product providers should be required to have audits and financial requirements.

Clearly this separation has to occur in the future.

Probablyon
9/05/2014 8:09:51 AM

Working for an independent financial adviser I can safely say his clients are probably better off with Ben.

Independence is nothing when you're garbage at your job. They've still got a preferred product suite, and though they've got the freedom to choose if at all possible it's always the same insurance and the same platform. The only time it would be anyone else is if they cannot use the preferred provider, and in those same cases at a bank they would look outside their own product suite anyway!

The variance in fees and premiums pale in comparison to the benefit of getting some strategic advice.

Matthew Rosson
8/05/2014 9:53:04 PM

SB, go and work for an independent or independently owned firm - that's the solution.

I have two advisers who are employees. No idea how you came to the conclusion that only business owners can be respected and called financial advisers.

I also see no problem to the comments on this blog. I think that the general public would see the comments as a positive - if all they saw was a bunch of advisers pumping up each others tyres saying the status quo is acceptable - to me that would give the public the right to give up on financial planning all together.

The conversation must continue...

Only the FP industryon
8/05/2014 8:39:14 PM

I openly tell people when discussing financial matters to avoid going to a financial planner PERIOD. Sound harsh? Not at all, you are all sales people & will find something to sell them they don't need. This latest FPA radio advert going around is a complete and utter joke and 100% false advertising. I wouldn't trust any FP to give the right advice without severely over charging because he couldn't flog some product or service. I'm sorry guys but everyone has had enough of your scare tactics, your financial "health check" rubbish which is just code for come in spinner, i want to size you up for a flogging. You have all milked the industry & your clients to death and the public is sick of it.

alleycaton
8/05/2014 4:50:14 PM

@SB, if I worked for Commonwealth Financial Planning (CFP) and wanted to stay there, I wouldn't be using a misleading acronym if indeed that's the case.To respond to the other issue that you raised, first off I earned my CFP the hardway by not getting any exemptions for my past University studies and secondly I studied Tax Law at a University as part of my Financial Planning qualifications and run my business, so mate there were no short cuts taken by this little "black duck".I don't care if you work under a license issued by a bank, a fund manager, an insurance company or ISA, but don't suggest there is no conflict of interest. The fact of the matter is that you cannot be any more conflicted that using an APL that has 50.0% or more manufactured by your parent owned AFSL.Even ASIC has woken up to that fact, finally, even though I've been banging on about it for a number of years.

Ben CFPon
8/05/2014 3:39:30 PM

@ alleycat - Yes I am a Certified Financial Planner thank you and have been so since 2005. And no I didn't get mine out of the corn flakes packet like many did, I actually studied for mine so I have every right to display these initials! I have more then earned the use of these initials! And so because I am defending myself I must not be any good? Your comments are nothing short of pathetic and down right obnoxious. Thank you SB you are correct, I have studied hard to gain my CFP status (no it was not grandfathered).

Why don't I run my own business? Because I don't want to. I come from a small business family and have seen the crap that goes with it and it does not interest me. I have worked in pratices where I had to source my own clients and I provide strategic advice, I never said anything about research, why would you when you can outsource it. So I cannot see why the personal attack when you know nothing about me and your assumptions have made you look like a fool.

And Mark you are very foolish if you believe someone's comments without any evidence whatsoever. If you all run your business the way you attack people without any form of evidence then god help your clients.

David from Perthon
8/05/2014 3:06:18 PM

I totally agree with Innocent Observer and SB. This is a great industry with 95% of planners doing the right thing. This discussion bring back memories that been going as long as I've a planner and that fees v commissions, who cares as long as the client is totally informed be it $2,000 or 2%. People love to justify there own existance.

SBon
8/05/2014 2:22:40 PM

No wonder the general public don't trust us. We do a pretty good job of attacking each other. The disrespect shown in these comments based soley on employer rather than behaviour is just sad. Alleycat seems to have missed the point that it is quite possible to work for a bank and have studied for CFP also, while you could be self employed and have a grandfathered CFP you "didn't earn". But thats a whole other argument for the playground.

Markon
8/05/2014 2:21:19 PM

Sorry but we need to get rid of the Conflicts of Interest (yes there are multilple conflicts). The industry does great things now, but will do better things when this is sorted! I'm seeing stories from referred clients whom have come to me because their previous adviser was a rogue. I'm talking fraudulent certificates & misappropriated funds - $600k+, I'm talking SoA's that clients have agreed to proceed with but the adviser overlooked implementing (for 12 months, costing $60k), I'm talking bad advise where clients spouse would have lost over $80k in potential Anti detriment payments etc...all in he past 12 months. These observations are at an all time high for me since 1988. I dont watch the media stories, because I already know bad stuff is happening. I'm proud of the work I do, but am not as proud of our industry. ASIC needs more funding so that it can keep using this as an excuse for being impotent and conflicts need to go! I also agree with alleycat and am shocked if Ben isn't a Certified Financial Planner, because his use of CFP definitely fooled me and that not on!!

Innocent Observeron
8/05/2014 1:45:47 PM

Jesus Christ, people, settle down…. Let's not turn this into a battle of "bank-planner versus everyone-else".

I've never worked for a bank but I do imagine that a sales culture is probably more recognisable than non-aligned practices. This shouldn't be a surprise in a vertically integrated model.

And I'd argue that having an APL limited to vertically integrated products is a hell of a lot better than leaving a fully-flexible APL to someone who doesn't have the investment skill or expertise required to build and maintain portfolios.

At the end of the day most advisers I have met or worked with are good guys (and girls) who act for their clients best interest. I'm sure this extends more or less across the board to all financial planners, whether they are working for banks, industry super funds or your local financial planning practice.

Let's not lose sight of the value that quality advice provides, and the critical role that advisers (regardless of breed or employer) play in this process.

alleycaton
8/05/2014 12:46:07 PM

@Ben CFP,First off, I hate the fact that use the acronym for whom you work gives the impression that you're a Certified Financial Planner because you happen to use the same acronym used by those who have earned the right to have the International designation of CFP after their names as a member of the FPA. You've become so defensive about your position at the bank, I wonder if you are as good as what you say you are at (a) Providing strategic advice(b) Finding New clients(c) Doing your own research as well paying one of the major Research Houses to assist in that function,....then why aren't you running your own business ?It's a rhetorical question perhaps.

Markon
8/05/2014 11:24:23 AM

Its really important that we understand what a Conflict Of Interest is. Most of us know what to do when a client gets divorced for example. This happens in other professions as well, eg accountants. If you/your employer owns product AND try's to sell advice, then that is a conflict of interest. Selling product is fine, as long as the buyer knows your primary objective is to sell them your/your employers product (the consumer then knows that this is not advise and that you/your employers view of the product could have bias). The problem occurs & stories on Four Corners are aired when product sellers also promote themselves as unbiased product and/or strategy advisers - that's a conflict of interest. If you work in such an environment it is not enough to say you will exercise good moral judgement for the consumer, as the system needs to rely not on good morals (because morals are not standardized) but on avoiding such conflicts in the first instance. Hence in our industry product providers (whether employer or employee) should not be able to promote themselves as unbiased advisers acting purely in the best interest of the consumer. FoFA seeks to address Conflict Of Interest created by bias in remuneration structures for advisers & dealer groups, but has left the major issue of product provider ownership of dealer groups for another day (maybe FoFA II). Banks clearly represent one of the worst examples of this conflict that one day hopefully will be removed.

Ben CFPon
8/05/2014 10:02:58 AM

Thanks for your insights Mark. Maybe I will 'grow a conscience' and find another job. After 20+ years of being an adviser it appears I have not got a conscience purely because I work for a bank. It is funny how the discussion turned from an attack on planners that work for a bank (sorry shouldn't be allowed to call them a planner if they work for a bank) to now an attack on the bank itself. I agree the bank is there for its shareholders (much the same as any small business looks after its shareholder, they just happen to be the owner). Funny though that I don't hear anyone in the industry complaining when the banks etc make great profits and their clients benefit from it because they have invested their client into them. A bit hypocritical don't you think. Anyway I think we have all said our piece and opinion so now it is time to get back to what we do best (depending on where you work of course!).

SBon
8/05/2014 9:56:53 AM

Matthew Ross, please provide me with the solution. I am a salaried adviser with an aligned group (not bank or industry fund.) I have no desire to be a business owner, my passion is in planning and I would prefer to concentrate my time on clients rather than running a business. I seek the respect of my fellow planners and don't wish to let the side down. So what are my options? As an independent do you employ salaried advice staff in your business and what KPI's do you set to justify their wage? Or are you suggesting that only business owners can be respected and called financial advisers?

Funky Gooseon
8/05/2014 9:50:44 AM

The biggest issue with the banks is not the planners but the management and banker mentality. Given their monopoly ( and the free passes such as the government guarantee on deposits ) they are accustomed to making extra ordinary profits ( and paying obscenely high salaries to their senior execs ) for doing commensurately very little. They treat mortgage brokers and financial planners that support them with contempt ( will dispense with them at will ) all in the name of increasing profits and building up the gravy train without any accountability of quality of service or advice. The problem starts at the top and the lobbying to government. Why isn't the government levying a tax on the banks in recognition for the government guarantee on deposits ? Instead they are imposing a debt tax on employees who do all the work and have the debt and bank accounts that the bank parasites exploit ?? Why are they allowing loopholes in the regulation for the banks to offer direct 'advice' when their track record in this area offers no basis for such an exception.

Mossmanon
8/05/2014 9:42:40 AM

Oh yeah Sean - how that set level is determined and by whom is a whole new can of worms/headache:

* Labor would appoint a panel of unionists and industry super fund board members who set the rate extremely low, whilst using a back door payment method to filter high rates of pay to the ISF advisers/execs.

* Coalition would appoint a panel made up of the big 4 banks, and a mining magnate for good measure, and payment would be set for 50% of the client's wealth.

* Paul Kohler would rant on the sidelines that financial advisers should only be paid $1 per client, per annum.

None of them would bother consulting representative bodies for the financial planning industry, or bother gaining any insight into our role and work.:)

Markon
7/05/2014 8:26:42 PM

Arrr Ben, I've worked in a bank, my son started his Fin Planning in a bank and my budget as you call it is about "servicing clients", not at all about product sales. You are kidding yourself if you dont concede that the banks are intense cross sellers of Financial Products (including bank accounts, loans, leases, Super, Insurances both GI & Life, Investment...the list goes on). They are now under FoFA trying to come to terms with selling advise (which is what I do), but banks are caught up in a world where their primary business is to sell product that they & shareholders own. They are accountable to shareholders for Profit from the sale of their products. So you may well only think about Strategy, but your employer thinks about product sales first & foremost and the culture of sales runs deep. So when your employer ceases to own product & sells advise for a fee, then & only then will you work for an employer who doesn't provide you with a conflict of interest. I think the banks provide a great nursery for new advisers but most grow a conscience & desire a more client focused role than banks provide.

As long as we get the same remuneration review panel as the federal government, that's a great idea and I'm all for it.

Mossmanon
7/05/2014 12:08:40 PM

My solution is simple and effective, (yet would NEVER happen): Regulate to have ALL product providers provide the same commission/fees/payments whatever. This removes ANY dollar/reward based incentive for an adviser to suggest one product over another, instead quality based factors become paramount. This allows product providers to compete on their value to the client, their service, their features etc, and NOT just based purely on how much commission they pay to an adviser.

Agriculture based funds (ie Timbercorp, Great Southern etc) were a prime example of high commissions impacting adviser recommendations (not in all cases, but certainly in many I suspect).

Whilst they are at it, legislate to remove high up front commissions to reduce churning.

Ben CFPon
7/05/2014 11:53:26 AM

Mark - I could provide 100% strategic advice to 100% of my clients and still meet my job requirements so product would have ZERO bearing on my advice. I am not paid under a product driven regieme (unless you class my strategic advice as a product) I am paid under what results I achieve from my business. This would be no different to your business in that you would have targets you must meet in order to ensure your business stays afloat and makes a profit (and you get paid!). If not then you are flying by the seat of your pants waiting for the next client to walk through your doors. You may 'think' you know how things work in the bank but the reality is you have no idea and you are just jumping on the bank wagon. You have no idea of 'my world'! I provide quality advice to my clients regardless of whatever product they may end up having (and yes I recommend product, the banks, other fund managers and god forbid even the odd industry fund where apropriate), end of story. You stay in your dream world where what you do is right and all us advisers who work for a bank are obviously wrong and are only product driven to earn the big bucks, because you know how our world works. Is it perfect? Of course not but neither is any of them, yours included. At the end of the day if the client is looked after, the advice is in their best interest and the product (whoever it is through) meets their needs and objectives and is competitive both in terms of performance and costs and the client is comfortable with everything then everyone wins.

How about this, all financial planners provide strategic advice only and let the customer go out and choose for themselves who they invest with. Things will end up just like the life insurance situation, they will either do nothing, do something but not enough or do something but totally wrong for their situation and be worse off than when they started. How is that in their best interests?

I call for the complete separation of financial product licensing, from financial advice licensing.

If all advisers who worked for banks where issued a license direct from ASIC, then the power shifts from the bank, with their sales targets etc back to the adviser, who just happens to work there.

Dealer groups should not be required or used, then ASIC has direct control over all the so called , good adviser and bad apples as they described some.

Innocent Observeron
7/05/2014 10:41:16 AM

"Only the FP Industry", you are conflating product with advice. Most financial advisers are strategic advisers; products are merely a tool through which to implement a strategy.

So let's say for a moment that you understand that point, and move on to your assertion that there is no value to the advice we provide.

Well for one, we (and I would say a majority of advisers) don't take on "clients" unless there is a clear and quantifiable benefit to them in doing so. Perhaps it's this selection process that explains the evidence (every research report on the matter in Australia & the UK) that shows that those with advisers end up significantly ahead of those who do not seek advice. I presume you're in the latter category, which is probably best for both of us (no offence, but we invest an enormous amount of time and emotion into our clients, so we choose to work with those that we enjoy working with).

As for how advice is priced, well that's something that is entirely up to the individual firm. Our pricing structure, for example, is crystal clear. Being a numbers guy myself, I know in relatively accurate detail what each hour with a client costs me. When we take basic office overheads, PI, dealer fees, software (etc) into the equation, then deduct the time we spend keeping at the forefront of changes in rules, regulations and red-tape (to ensure our clients get the absolute best service and strategies), the total cost per available hour for an adviser on a relatively modest $85k salary works out at roughly $115. That's without any margin for profit or margin of safety (i.e., if we charged you $115 an hour and the adviser was ill, or we were not running him at 100% capacity, we would go broke). Sure, the cost of advice to our businesses is something that many of us don't spend time discussing, but then again why would the client want us to? You don't ask the local mechanic how he calculates labour costs, do you? Or your dentist, or hairdresser….

Anyway, I'm not trying to change your views. Personally I don't really care, and I certainly don't take offence. However as with any debate it serves both sides well when facts are discussed and constructive criticism is involved: only then can progress be made.

And with that, I'm stoked to be returning to work with the clients and I know and love!

GABon
7/05/2014 10:16:07 AM

Commission on investments is largely dead now. So, grabbing big upfront commissions and fees is now more the domain of the unregulated spruikers.

Oh look what just popped into my email inbox...titled "Commission Opportunity $$$". A property group hoping I might lure some of my clients into their highrise residential complex. The title of the email is disturbing.

Adviser Bon
7/05/2014 10:12:06 AM

"Only the FP Industry" - you lost me when you claimed no one actually needs financial products or insurance... and the rest of your post went downhill from there (if possible).

Anyone who has ever made a claim on insurance and been paid out would vehemently disagree with your assertion that insurance is not needed.

I'm not even sure why you are on this website given your apparent hatred of all things relating to finance and the advice industry?

Anyway, I hope you, or your family, NEVER have anything go wrong in life and require insurance, and I hope because of your pure luck, you are proven right. Best wishes.

Only the FP industryon
6/05/2014 11:29:39 PM

No surprises in that show. EVERY Financial planner "sells" something a client doesn't actually need but makes them believe it's needed. Whether it's your overpriced soa fee or your ridiculous ongoing fee, it doesn't matter, you are in an industry born & built from the sleezy life agent. Considering 80 to 90% of people don't need your advice, financial health checks(joke!), insurance flogging & fee leeching tactics due to the BEST strategy being to pay off your mortgage, it leaves you with retirees lump sums being bled for service fees when all they get is a tingle now n then and a sit down review(another joke). If your honest you'll charge for just when you see them & nothing more. Until then, your no better than CBA. It's time to rid this industry altogether of fee sucking conmen hiding under the "fee for service" mantra.

Matthew Rosson
6/05/2014 8:54:05 PM

I find it hard to understand how financial planners aligned to one of the four banks, an insurance company or fund manager can tolerate what we saw on 4 corners last night.

A sales culture is present somewhere in every bank, insurance company and fund manager that employs financial planners. How can you turn a blind eye to that and say 'not my problem - I operate as a professional and that's all I have to worry about'?

I am not aligned to a product provider and I see all this as my problem.

It's time financial planners aligned to product providers showed some true courage and integrity and put in place a plan to break the link between product providers and themselves.

Product providers are dragging us down. You're dragging us down. I propose we give financial planners until 1 July 2016 to break this link - after this date - any adviser aligned, associated or employed by a product provider deserves no respect and has no entitlement to call themselves a "professional".

I know I'm dreaming...but wouldn't it be nice.

Baffledon
6/05/2014 4:55:29 PM

i diagree with Dan. When client already had a watertight policy with Westpac that sufficiently covered there would not have been any incentive for the client to lie. It is not difficult to see who had incentive by client moving his policy across to CBA, it was clearly the bank and no one else. I dont want to go the extent of saying it but there is a potential of bank adviser being instrumental in putting incorrect information on client's health questionaire form, as only he and the bank gained from having that policy across to them from another bank???

Alistairon
6/05/2014 4:03:36 PM

The answer is simple. Bank planners should be compelled to place a warning about the advice they have received with a recommendation that the client ought seek advice from a less biased planner not subjected to sales targets.No, this is not from an industry fund or a life office either.I as a planner of 29 years am fed up with the inert and incompetent attitude of those in charge at ASIC and even within the industry.We do not need the rubbish of these 4 banks, life offices and industry funds calling themselves professional on one side as they thieve, lie and frustrate consumers and us honest mugs as advisers. Enough is enough.Penalties to these folks are a minor issue.They ought be hit where it hurts. How about large,,,very large fines. Lets start at $1 Billion dollars. Yeah...they might take notice of that one. Oh and how about prosecuting those at the top. Lets say by placing these folks, there help at the top and those salesman down the chain say...in jail!!!Lets ban the fools in charge from EVER holding office in a corporate sense and place punitive damages at their feet also.I thought the 4 corners episode were a disgrace to the industry, honest advisers and most importantly the consumer.How can we call ourselves a profession when fools in charge allow these problems to sully our image to our clients.Damaging our business with paperwork and compliance upon compliance is not the answer and solves little to the detriment of the consumer.Best Interest duty eh.....not enough...not even close !!!!

Innocent Observeron
6/05/2014 3:23:48 PM

With all due respect to everyone, I don't think anyone (including myself) can really make full judgment after less than 60 minutes in front of the TV.

Yes, it does appear that there were issues of non-disclosure. Yes, it does seem a pretty liberal use of the term "counselling" if the Frankston medical clinic suggested to him that 8 stubbies a night was maybe a little on the high side….

And of course yes, it does sound like "Dodgy Don" was cutting corners. But he wasn't siphoning off client money to his personal bank accounts, and there certainly seems to be no intent to defraud or otherwise screw over clients.

At the end of the day let's not get sucked into generalising bank planners as crooks or commission-hungry salesmen, the same way that ISA generalise ALL financial advisers.

Also, let's be careful not to get suckered into focusing solely on product. Sure, having everything in a CBA-aligned product might not be the absolute most efficient structure, but as products are only a conduit for strategy we shouldn't jump to conclusions on the validity or quality of advice.

In my opinion, the only two really clear breaches was misallocating client risk profiles and - the biggie, which should see prosecution of some sort - changing SoAs after the fact.

Markon
6/05/2014 2:52:32 PM

My comment is directed to the bank planner Ben CFP. I am a CFP with my own business & have been a planner for over 25 years. Ben I agree with most of what you say BUT the problem is that whilst you promote strategy as your main service offering you are paid under a sales driven regime, so my friend PRODUCT is a big part of your world If you wwant to keep your job. Sales was a big part of my world when I first started out (as I was in intense growth phase), these days its about looking Strategy & servicing the client. New clients come on board & my only agenda is to give good advise, unfortunately you've got annual budget sset by your employer, so its all about PRODUCT.

Danon
6/05/2014 1:27:44 PM

JM has hit the nail on the head. The client completed his application form "incorrectly".Therefore, either: 1) the underwriter should not have accepted the application 2) "incorrectly" really means "lied" whereby the product issuer discovered the client was not forthcoming on his medical background.If the former, product issuer (Comminsure) fault. If latter, client fault.

Jackion
6/05/2014 1:21:38 PM

IssuesPoor/Wrong advice for individuals.

Causes1) Financial Planners motivated by CBA to earn more and/or keep their job.2) Financial Planners not independently audited for quality of advice and penalised for inappropriate advice.3) Financial Planners being in a position of power of knowledge over their client and potentially abusing this power.

Solutions1. Simplify compliance and regulations to make it easier for financial planners to follow (stop creating excessive paperwork and fuel for lawyers and start protecting clients)2. Have independent audit companies that report to ASIC. Improve regularity and amount of files that are randomly audited and increase the penalty for breaches, for example reduce/stop bonuses depending on breaches that occur.3. Provide greater guidance to clients on who they are receiving advice from (to encourage adviser and their clients to seek independence from ‘product distribution’ advisers):i.e. In the UK they label financial planners as either:Tied Financial Planner - Only provides advice from one providerMulti-Tied Financial Planner - Provide advice from 2 or more providersIndependent - Not tied to any distribution chain

Government, ASIC this should not be so hard.

David from Perthon
6/05/2014 1:01:45 PM

I saw the program last night and whilst the media will always taint it towards the customer and the insitutiona as the bad boys lets put some thigs into perspective. re the guy with the insurance it was knocked back because the CBA when looked into it further a Dr stated he was a heavey drinker cause he had 8 beers a day......whoa big deal, the Dr may have written that down but he never discussed that with him the clients perception is that its no big deal as done it for years and never had a health problem. Remember he was a scaffolder and not in this industry and if that was the only thing the CBA could pin on him then shame on you CBA, no wonder the client got his money in the end even if he had passed away. Re the CBA Planners so far its 8 planners $52 million in compensation with 1,100 clients. Those 8 planners have been busy little bees. Aagin for CBA not to act on this heaps earlier is a disgrace and to obmit all responsibilty to the clients that they have paid out is also a disgrace. I would say that most of the CBA planners do the right thing as the nuber is only 8 but this should have been delt with years ago when it was brought to the attention of CBA and ASIC by the former planner of the CBA who spent a huge amount of his own time helping these people. ASIC it seems that you love pointing the finger at everyone else but when its pointed at you, you hide like little children and try to blame others. Look yourself in the mirror and take responsiblity and next time act quicker instead of sitting on your hands.

Mossmanon
6/05/2014 12:53:36 PM

I'm not defending the banks and certain practices overall, but in relation to the Noel Stevens story, the client outright lied on his application form. He drank 8 beers every night, was counselled by a doctor on his alcohol levels, chose to lie on the application and state he had never been counselled about alcohol abuse, and then upon dying from an alcohol related illness, the adviser gets the blame for the deceit.

How does a client lying on his form become the fault of the adviser? What did the adviser do wrong? Offered a cheaper product with a similar level of cover, ie provided a better value product to the client and saved him money. The outcome of his benefit not being paid was a direct result of his lying, not due to anything wrong or inappropriate the adviser did.

Should advisers all be required to attach every client to a lie detector? Our clients are (supposedly) adults, if they choose to knowingly lie, and we provide sound advice that is unknowingly based on these lies, should the adviser be blamed? Clients may not have much financial knowledge, but as adults they DO know that lying is wrong and can consequences. The expectation that an adviser should somehow know when a client lies, and the adviser is therefore to blame for the lie and not the client, is wrong.

Robon
6/05/2014 12:15:58 PM

Given that planning should mainly be about goal attainment in the long term, I would classify bank employees as product consultants if I was being generous. I have yet to see a bank SoA that was concerned about long term client specific goals. Systemic is a word that comes to mind.

Ben CFPon
6/05/2014 12:08:16 PM

The basis of so many of your points relate to product whereas I am referring to providing strategic advice. Product is irrelevant if the strategy is wrong. I too have worked in a non-aligned dealer group but they still had a preferred product range and pushed that wherever possible but that again is irrelevant. If the basis of the advice is wrong product means nothing. I can and do provide strategic only advice and charge accordingly. How does that then make me a product flogger? It doesn't and it completely makes your argument null and void.

Michael Kon
6/05/2014 11:55:20 AM

I have worked in the bank and seen first hand what Mark Longhurst is referring to. Ben CPL, respectfully I'd say your offense is rather meaningless in light of the facts. I currently work for a non-aligned dealer group and while we still work to an APL, having hundreds of products is clearly better than having less than 10. The experience with banks is clear, you'll rarely if ever encounter a client being told by a bank employee that the competitor has a better product. Either because the relevant salesperson (aka adviser etc) does not know, does not care, or cannot divulge the information under the terms of their employment contract. You have only those such as 'Not Surprised!' above who take it upon themselves to go outside their employment mandate. I have no personal issues with the banks operating in this way, however we should call a spade a spade and to my mind it is beyond any doubt that someone selling 5 or so products is not a financial planner. At best they are a bank planner.

Ben CFPon
6/05/2014 11:54:47 AM

Oh of course the independents are the only ones who provide appropriate advice! And of course they are the only ones who can find clients on their own because they are so special. What a load of rubbish. This is where so many get it wrong. Advice is around strategy not product. It doesn't matter how the client pays for it, be it debiting their bank account or debiting their portfolio. If the strategy is appropriate and the product is suitable, appropriate and competitive then there is no issue. Surely you are now not saying that the bank's products are not appropriate because they aren't the cheapest or they don't perform the best all the time? What product does? Today's best performer won't necessarily be tomorrow's best. Because a product is cheap doesn't mean it is the best or is appropriate. Get off your high horse and actually try and support the industry for what it is meant to do and that is provide advice. I have come across independent planner SoA's who supposedly are experts in their field and their plan was rubbish! The product and fees were irrelevant because their strategy was wrong in the first place. Had the client gone ahead with them then they would have been in severe financial distress within two years. And the information within the plan was wrong. So much for putting the client first!

And Tony R yes my comments were general in nature yet the original post was a direct hit on ALL bank planners 'banks should be banned from calling their sales staff financial planners'. Me saying plenty is a far cry from all banks! But hey I only work for a bank therefore I am not a real planner apparently.

Tony R.on
6/05/2014 11:43:27 AM

Well Ben CFP, it's not much chop getting a bit touchy when someone has a go at bank planners by making an big generalisation that they are just product floggers and then you just go and do exactly the same thing and make a big generalisation about non-aligned planners giving crap advice. What a joke!

alleycaton
6/05/2014 11:32:25 AM

I'm not sure I agree with many of these comments.The question often prevails is, why do planners work for a bank or any major institution if they are so conflicted by their terms of employment, albeit by the APL or how they are paid ?Eradicating commissions doesn't make you any more less conflicted than charging a fee for service. Is there anyone out there who doesn't charge a fee that equated to their previously charged commissions?The obvious answer is that many are not good at finding clients and this is perhaps the easy way for that to happen. This clouds the issue as to whether the advice is appropriate.Despite what some of you say, you cannot serve two masters.The client should be foremost king, and the interests of the client need to be served first second and last.For many of the independently owned AFS licensees, this is the only way we have survived.

LS Financial Planneron
6/05/2014 10:59:59 AM

In a business society, almost every occupation is type of sale, the issue is how to sale, accoutants/solicitors sell their services, doctors/dentist also sell a lot of their services. So that is why we need compliance to make sale procedurea fairer. The banks plays bad role because they take advantages on clients and care only revenue rather than the interest of clients. The original sin is "commission", so the industry should ban all type commissions and change to fee for service model and make the fee as tax deductible.

James Howarthon
6/05/2014 10:46:17 AM

I agree with Mr Longhurst's comments. Bank, based financial planners should not be called financial planners.

In fact the best course of action would be for the complete separation of advice and product. Right now in financial services, the doctors work direct for the pharmaceutical companies, and this is 100% because ASIC does not know a thing about conflicts of interest and are complicit in the most major of conflicts in the industry.

It is clear that if dotors worked direct for Big Pharma there is a conflict. Yet ASIC like little lambs cant see it in financial services.

Arent lawyers supposed to be savy?

JMon
6/05/2014 10:43:11 AM

If the client lied on the personal statement, when applying for the new cover, none of us could surely think that is ok? Can we?

Greggleson
6/05/2014 10:23:39 AM

Well done to Jeff Morris for standing up to this ridiculous behaviour within our profession. He should be commended!!! However, it is a shame that the 'bad apples' are left to continue their wayward ways whilst the regulator and licencees look on. Compliance is one thing but it does not guarantee honesty. More of us within the profession should be making these people known to the regulator - if only the regulator will listen!!!!!!!

Ben CFPon
6/05/2014 10:21:14 AM

Mark Longhurst - Your comments are an insult. I work for a bank and my advice revolves around strategy and what is best for my client (I have been a planner for 20 years)! There are plenty of planners who are not aligned with a bank (ie: AMP, etc) yet still provide crap advice and are only product centric. I would say in the vast majority of cases a planner is recommending a product of some description and usually one they are aligned to. Therefore none of those advisers should be called a 'financial planner' either based on your logic! Won't leave many 'financial planners' left!

Not surprised!on
6/05/2014 10:14:54 AM

The banks (I work at one) are only concerned with one thing and that is revenue. They place unrealistic targets on planners (and branch staff) and threaten them with removal if the targets are not met. They say the client comes first but everything always reverts back to the revenue and how much has the planner obtained this week! Why work with them then I hear you say. Well unfortunately not all of us have the opportunity to pick and choose where we work due to various reasons. At the end of the day I do what is right for the client no matter what and this quite often upsets the bank because it means I haven't obtained revenue from that client (even though on the surface they try and make it appear that they are interested in the client). Well that is tough because it is their money, not the banks and they must come first. Better get back to work and get some revenue!

mark longhurston
6/05/2014 10:07:57 AM

maybe in defense of the way the industry is trying to go forward, banks should be banned from calling their sales staff 'financial planners' if you are pushing product for a provider you shouldn't be allowed to sully the reputation of real planners!!!